Pontotoc utility customers to see lower rates

TUPELO – Thousands of Pontotoc Gas System customers will see their rates drop after a Mississippi Public Service Commission review deemed them too high.
Starting immediately, residential rates will decrease from $9.56 per MMBTU to $7.14 per MMBTU.
Northern District Public Service Commissioner Brandon Presley said his office received a tip the utility was overcharging customers. Upon reviewing the rates, he found the gas system set its rates higher than its actual cost of business, which it’s not supposed to do, he said.
“By law, they can only charge what they have evidenced is their cost,” Presley told the Daily Journal on Wednesday.
Until that cost can be determined, the city and the PSC agreed to set the rate at the most recent figure on file at the PSC, which is $7.14 per MMBTU. The utility must submit a new rate plan before that amount will change. Presley said it could go up or down.
“They had not filed anything since 2000,” he said, “and had not filed a rate case since 1997.”
Presley further stated the utility had some $3.3 million in the bank from years of overcharging. He hinted a refund to customers could be warranted.
The utility wasn’t intentionally overcharging customers, said Pontotoc Mayor Jeff Stafford. It had adjusted its rates annually according to fluctuations in the gas market. And it had lowered those rates two years in a row based on decreasing prices.
In light of the PSC’s findings, he said, the city will adjust rates monthly to reflect market values as they occur.
Stafford also said the $3.3 million is a normal amount to be in the bank this time of year. The utility uses much of the money during the summer months – when it doesn’t sell as much gas – to continue paying its operating expenses.
Those funds will dwindle by fall, he said.
But some of the cash balance slowly has been accumulating over the course of the past 60 years, during which time the city has owned Pontototc Gas System, Stafford said, referring to it as a typical reserve.
He also defended the utility’s rates.
“We’re the lowest gas in north Mississippi,” he said. “We’ve got our costs down, and now we can share it with the customers.”
Most customers won’t immediately notice the lower rates, because their warm-weather gas purchases likely won’t exceed the monthly minimum fee of $11, Stafford said.